Cannabis and CBD have been exploding in growth over the past few years and for good reason but operating a vertically integrated or stand-alone cannabis business has unique and complex challenges. As the US industry tops $61 billion and growing, the pressures to legalize the industry within the US and other countries is real, with the US leading the global trend should generating around 85% of legal sales worldwide. Many analysts are beginning to see the upside in terms of tax revenue as well, as the estimated tax revenue for the federal government alone hovers around $132 billion over a 10-year period. 34 states have legalized medical cannabis, which means competition is not just local, but at the national level as well.
CBD is growing as well, with the adoption of many users finding that it helps their mood, their joints, sleeping issues, pain challenges, and more. People are using CBD not only for themselves, but for their pets as well. The FDA-approved CBD prescription cannabidiol has shown to reduce the number of seizures by 39% – 51%. Whether one should try or use CBD is entirely their own decision, but the reality is that these businesses experience the same challenges and hurdles that all experience, on top of some greater ones as well.
The industry continuing through rapid growth, yet there are still uncertainties which remain, thus having a partner who has the ability to help create sustainable end-to-end solutions can be a market differentiator for an organization. We help new and existing entrepreneurs, as well as seasoned veterans, through the challenges of the industry with our expertise in the market. We do not pretend to know how best to grow your crops, but we do understand the crops, we understand all the aspects which create a successful product, and we provide help across the business functions to create sustainable growth, decreased costs, increased profitability, preparation for an exit, regulatory compliance, supply chain operations, the foundations for leading a successful startup, licensing applications, and more.
A few of our top learnings over the years about the industry –
- The process for competing for a state cannabis business license is complex, and there are many moving pieces which beyond the application itself, which many of our clients underestimate the time required to submit and obtain a winning package.
- When it comes to preparation for your licensure and the application process, there are three areas that we advise our clients to be extremely tight and clear on prior to submitting an application:
- Have a well thought out and thorough business plan with projected financials, including building different models to account for possible pivots that could be foreseen and how you will handle those pivots
- Ensure that you have secured a physical property for your operations which is compliant with local and state laws and regulations; and ensure that you have developed and can demonstrate a strong, positive relationship with the local community. Application evaluators want a licensee to have a community which is supportive and where you plan to give back when determining who they will issue a license too
- As with every cannabis operation, there are certain individual licenses which your organization must have a stakeholder with, such as Medical Doctor or a Director of Security. Many states have extremely tough policies with regards to these and finding talent can still be difficult within the industry. To maximize your chances of obtaining a license, you should aggressively seek out qualified people from a variety of backgrounds to include within your business, particularly in ownership and management capacities.
From successful business strategies, selecting and implementing technologies, navigating the licensing process, assisting with capital debt raises, designing effective marketing and branding strategies, to implementing sustainable and standardized operations, Cultivate Enterprises has deep industry and agricultural experience in a variety of facets within the cannabis and CBD industry which can help.